The Gulf of Mexico oil spill: consequences for the oil and gas industry

On April 20, 2010, an explosion on the Deepwater Horizon rig, (or the Macondo oil well, as it was also known), located in the deep waters of the Gulf of Mexico off the coast of Louisiana, resulted in 11 rig workers dying, the rest of the crew being evacuated, and a large rupture in the oil well. Efforts to contain the vast amounts of oil spilling from the rupture took many months and were conducted under intense media, political and public pressure. A permanent seal was finally established in September 2010, but not before four million barrels of oil had been released, making the Gulf of Mexico oil spill the largest accidental ocean oil spill in history.

It was an environmental disaster and a public relations nightmare for oil company BP, who operated the rig. The effects have been wide-ranging, and are likely to be felt for years to come, not just by the businesses and communities in the immediate vicinity of the spill, but by oil and gas companies all over the world.

In Canada, where the oil sands are a major export, authorities are awaiting the outcome of the US investigations before taking any regulatory action. Dennis Mahony, notes that the oil sands have already faced negative press from environmental groups, and that the Gulf spill has increased generalised sensitivity to the impact that industrial operations can have on the environment. "The negative focus on the oil industry that comes with the Gulf of Mexico spill does not help the oil sands," he adds. However, Mahony also notes that the Canadian government is likely to adopt a "wait and see attitude" to what the US might do, because the oil sands in Canada are a lucrative export, and "we cannot afford to be insensitive to what the US is going to do from a trade stand point ".